search ebook Required: 1. Compute the unit product cost for one storage cabinet.
ID: 2406881 • Letter: S
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search ebook Required: 1. Compute the unit product cost for one storage cabinet. 2. Prepare an income statement for the year. EXERCISE 8-7 Variable and Absorption Costing Unit Product Costs; Income Statements [LO1, LO2] Baxtell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: ariable costs per unt Manufacturing Direct labour... Variable selling and administrative Fwed manufacturing overhead.. Fxed costs per year ....200000 10000 During the year, the company produced 25,000 units and sold 21,000 units. The selling price of the company's product is $65 per unit. Required: 1. Assume that the company uses absorption costing a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing. a. Compute the unit product cost. b. Prepare an income statement for the year. EXERCISE 8-8 Inferring Costing Method; Unit Product Cost [LO1, LO4] Exercise 8-8: Help Me Solve It TutorialExplanation / Answer
Income statement under Absorption Costing
Sales (A) = 21,000 x 65 = $1,365,000
Production costs:
Direct materials (25,000 x 25) 625,000
Direct labor (25,000 x 12) 300,000
Variable manufacturing overhead (25,000 x 3) 75,000
Fixed manufacturing overhead 200,000
Cost of goods produced 1,200,000
Less: Closing inventory of finished goods -192,000
Cost of goods sold 1,008,000
Variable selling and administrative overhead 105,000
Fixed selling and administrative overhead 110,000
Total cost (B) 1,223,000
Profit (A - B) 142,000
Unit product cost = 1,200,000
25,000
= $48
Income statement under Variable Costing
Sales (A) = 21,000 x 65 = $1,365,000
Variable Production costs:
Direct materials (25,000 x 25) 625,000
Direct labor (25,000 x 12) 300,000
Variable manufacturing overhead (25,000 x 3) 75,000
Cost of goods produced 1,000,000
Less: Closing inventory of finished goods -160,000
Cost of goods sold 840,000
Variable selling and administrative overhead 105,000
Total variable costs (B) 945,000
Contribution (A - B) 420,000
Less: Fixed manufacturing overhead - 200,000
Less: Fixed selling and administrative overhead -110,000
Profit 110,000
Unit product cost = 1,000,000
25,000
= $40
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